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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 26 September 2024 E X P E R T I N S I G H T S details. They will help figure out how to- day's interest rates and different mortgage options might impact your overall budget and long-term plans. You should also make sure that you get a copy of your current credit report. This gives you the opportunity to ensure that there are no errors in the report that could impact a mortgage application. Doing this early on gives you the time to address and fix any errors prior to applying for a mortgage, which is key. Credit reports impact your credit score. And your credit score not only impacts approvals but also impacts the pricing of the loan. High credit score borrowers typically have a lower rate and pay lower interest over the life of the loan. Before you even begin your search, you should assess your credit with a professional. Home buyers (especially first-time homebuyers) should have conversations with lenders about affordable product options that assist homebuyers right from the beginning. Many lenders offer various products geared toward first-time and other homebuyers. For instance, TD Bank launched TD Home Access Mortgage, an affordable mortgage option that includes a $10,000 lender credit for purchase transactions that doesn't require repayment. This can really help first-time buyers with lowering their down payment or perhaps buying down their interest rate. The product also offers more flexibility with greater debt-to-income (DTI) ratios, expanded underwriting requirements, and credit parameters that increase accessibility. So, the simplified takeaway is that it is important to do your homework and find a lender that can identify offerings and options that work for you and your unique budget. Q: In the current marketplace, what do you see as possible market corrections to alleviate the affordability crisis? Scott Lindner: Major sticking points in this housing climate are low invento- ry and higher home prices, which are significant drivers for housing demand. When you add on the higher rates, it creates a tough housing market that isn't likely to shift significantly any time soon. To give added perspective, in the spring of 2019, the 30-year mortgage rate was below 4% and then the pandemic happened. That drove historic rates below 3% for several months, and we didn't get back above 4% until the spring of 2022. That's almost three years of rates being below 4% and that has shifted the housing market for the foreseeable future. Those years provided a lot of time for existing and new homebuyers to lock in at such low rates that they aren't looking to move and lose that low rate for today's higher one. All this feeds into the affordability crisis. As an example, a 30-year $350,000 mortgage in 2021 at 4% would have a monthly payment of $1,909. That same payment today would be $2,661, 39% higher because rates are around 7%. Additionally, if you look at the economy, it's in relatively decent shape as it relates to employment and consumer spending. This should give the Fed the ability to reduce short-term rates, maybe as early as September. As a result of this Fed action, along with the expected subsequent rate cuts, we may see a more robust spring market as mortgage rates begin to ease. Home buyers (especially first- time homebuyers) should have conversations with lenders about affordable product options that assist homebuyers right from the beginning." —Scott Lindner, National Sales Director of Mortgage Lending, TD Bank